Correlation Between LG Display and Kyocera ADR

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Can any of the company-specific risk be diversified away by investing in both LG Display and Kyocera ADR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LG Display and Kyocera ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Kyocera ADR, you can compare the effects of market volatilities on LG Display and Kyocera ADR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LG Display with a short position of Kyocera ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Kyocera ADR.

Diversification Opportunities for LG Display and Kyocera ADR

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between LPL and Kyocera is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Kyocera ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyocera ADR and LG Display is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LG Display Co are associated (or correlated) with Kyocera ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyocera ADR has no effect on the direction of LG Display i.e., LG Display and Kyocera ADR go up and down completely randomly.

Pair Corralation between LG Display and Kyocera ADR

If you would invest  411.00  in LG Display Co on December 29, 2023 and sell it today you would lose (1.00) from holding LG Display Co or give up 0.24% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.35%
ValuesDaily Returns

LG Display Co  vs.  Kyocera ADR

 Performance 
       Timeline  
LG Display 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days LG Display Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Kyocera ADR 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Kyocera ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Kyocera ADR is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

LG Display and Kyocera ADR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LG Display and Kyocera ADR

The main advantage of trading using opposite LG Display and Kyocera ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Kyocera ADR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kyocera ADR will offset losses from the drop in Kyocera ADR's long position.
The idea behind LG Display Co and Kyocera ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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